OMAHA, Neb. — Warren Buffett now has more than $325 billion in cash after continuing to sell billions of dollars of Apple and Bank of America stock this year and continuing to collect a steady stream of profits from all of Berkshire Hathaway’s diverse businesses without finding major acquisitions.
Berkshire said it sold about 100 million more Apple shares in the third quarter after cutting its massive investment in the iPhone maker in half last quarter. The remaining stake of about 300 million shares was valued at $69.9 billion at the end of September and remains Berkshire’s largest investment, but it has been significantly reduced since late last year, when it was worth $174.3 billion.
Investors will also be disappointed to learn that Berkshire did not repurchase any of its own shares during the quarter.
Cathy Seifert, an analyst at CFRA Research, said shareholders will wonder why Buffett continues to accumulate so much cash. “Are they more pessimistic than others about the future of the economy and the market? she said.
Buffett said at the May annual meeting that part of the reason he started selling some of his Apple shares was because he expected tax rates to rise in the future . But Edward Jones analyst Jim Shanahan wonders if part of the reason Buffett started selling Apple has to do with the death last year of Vice Chairman Charlie Munger, as sales began shortly after. time after Munger’s death. Shanahan said Buffett has never been as comfortable with tech companies as his longtime partner.
“If Charlie Munger were still alive, maybe he wouldn’t have sold his position so aggressively — maybe not at all,” Shanahan said.
Berkshire said Saturday that investment gains again pushed its third-quarter profit to $26.25 billion, or $18,272 per Class A share. Unrealized losses on shares a year ago paper investments sent the Omaha, Nebraska-based conglomerate’s profits plummeting to a loss of $12.77 billion, or $8,824 per Class A share.
Buffett has long recommended that investors pay more attention to Berkshire’s operating profits if they want to get a good idea of how the companies it owns are performing, because those numbers exclude investments. Berkshire’s net profit figures can vary widely from quarter to quarter, as can the value of its investments, whether the company bought or sold something.
By that measure, Berkshire said its operating profit fell only about 6%, to $10.09 billion, or $7,023.01 per Class A share. That compares to 10. $8 billion last year, or $7,437.15 per Class A share.
All four analysts surveyed by FactSet Research predicted that Berkshire would report operating income of $7,335.11 per Class A share.
Berkshire’s revenue didn’t change much, at $92.995 billion. A year ago, its revenue was $93.21 billion. That figure was higher than the $92.231 billion in revenue predicted by three analysts surveyed by FactSet.
Berkshire owns an assortment of insurance businesses, including Geico, as well as the BNSF railroad, several major utilities, and a diverse set of retail and manufacturing businesses, including brands like Dairy Queen and See’s Candy .
One of Berkshire’s insurers, Guard, reported additional losses compared to previous years after executives reevaluated its policies.
Berkshire solved a mystery of the quarter by clarifying how much it paid to acquire the remaining shares of its utility business from the estate of former Berkshire board member Walter Scott.
Berkshire said it paid $2.4 billion in cash, issued $600 million in debt and gave the Scott family Class B Berkshire shares worth just over $1 billion. The total compensation was therefore approximately $4 billion. That means the Scott family didn’t get as good a price for its 8% stake in the utilities as it did when Berkshire Vice Chairman Greg Abel sold his 1% stake in the utility sector two years ago for $870 million.
Abel is expected to succeed Buffett, 94, as CEO in the event of his death.
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